Texas Is Removing a Tax on Some Delivery App Fees

TEXAS -- If you've ever ordered a $14 lunch through a delivery app (like I do way more often than I care to admit), and somehow arrived at the checkout screen feeling like you've just financed a small car, you already know how those fees can add up.

Now Texas is moving to remove a tax involving some of the fees behind many of the apps and online marketplaces we use every day.

Texas Comptroller Don Huffines signed an executive order September 30 directing his agency to amend a tax rule that affected fees connected to everything from food delivery and online shopping to ride-sharing and even pet sitting.

So What Exactly Was Texas Taxing?

This part gets a little confusing, so here's the normal-person version, at least relatively speaking.

The policy wasn't simply another sales tax being tacked onto your DoorDash order. A rule adopted under the previous comptroller's administration treated certain fees that businesses and others pay to online platforms as taxable "data processing services."

That could mean a restaurant paying a delivery platform like DoorDash or Uber Eats, a seller using Amazon, eBay or Etsy, or someone using a platform for short-term rentals, ride-sharing or other services could owe tax on fees charged by the platform.

Meanwhile, customers could still be paying applicable sales tax on whatever they were buying.

The Comptroller's office argues that the interpretation went too far and resulted in two layers of taxation connected to many transactions.

Does This Mean Your DoorDash Order Is About to Get Cheaper?

Not necessarily.

The tax we're talking about generally falls on fees charged to the businesses and people using these platforms, so there's no guarantee companies will respond to the change by lowering the price you see at checkout.

There's also some government housekeeping still left to do. The Comptroller has directed the agency to formally amend its rule. The proposed change will be published for a 30-day public comment period before the rule can be finalized.

So no, this doesn't mean your $14 lunch is suddenly going to cost $14 again. That would apparently require a different kind of miracle.

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